Megatrends

The most influential Megatrends set to shape the world through 2030, identified by Euromonitor International, help businesses better anticipate market developments and lead change for their industries.

Cigars, Cigarillos and Smoking Tobacco in South Africa

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Executive Summary

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PROSPECTS

Traditional pipe tobacco to leave space for water pipe tobacco

Demand for traditional pipe tobacco is expected to continue declining as its targeted ageing consumers are not replaced by a younger generation of smokers. The situation will be worsened by the increased urbanisation rate amongst millennials, with many having been exposed to substitutes like fine-cut tobacco.

Cigarillos to succumb to rising duty

Demand for cigarillos is expected to continue declining during the forecast period, driven by rising duty imposed by the government. Such conditions might stimulate illicit trade within the category, hence putting additional pressure on distributors.

Fine-cut tobacco is expected to remain the fastest-growing category

Fine-cut tobacco will remain the fastest-growing category in smoking tobacco, as it continues to generate traction amongst generation X and Z consumers living in urban areas. The move will be supported by spillover effects from global trends as well as intensified awareness campaigns against cigarette consumption, with an increased number of smokers opting for substitutes with a lower content of chemicals.

COMPETITIVE LANDSCAPE

Cigars and cigarillos severely affected by illicit trade

Demand for legal cigars and cigarillos continued to drop during the review period, as the government hit the category with higher duty. The move was particularly damaging for cigars, with excise duty increasing by 3.

Demand for organic and additive-free fine-cut tobacco on the rise

The hype in smoking tobacco came from a rising demand for organic and additive-free fine-cut tobacco. Products found in the marketplace were mostly extended variants of existing imported brands, with labelling often used as a key differentiation tool.

Phillip Morris International benefits from cost leadership

PMI continued to dominate smoking tobacco despite challenging conditions, as the category was subject to a shrinking consumer base, with younger smokers opting for modern substitutes. The situation was worsened by increased excise duty, with pipe tobacco being subject to a 3.

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Overview

Discover the latest market trends and uncover sources of future market growth for the Cigars, Cigarillos and Smoking Tobacco industry in South Africa with research from Euromonitor's team of in-country analysts.